Formatting a drive does **not** remove any data.
The data is still there, but in an unorganized fashion.
Any undelete software (example: GetDataBack NTFS) can recover the files. It also works perfectly well on encrypted Truecrypt volumes (checked myself).
Also, one need to be careful when selling a hard drive, because any data, that hasn't been securely erased or filled with zeros, can be easily resurrected.
I red somewhere that the only 100% sure way to erase data on a disk is to expose it to a 1,200°C temperature.
Well FBI / CIA may be able to read the data after you zero-fill it once or twice.
To absolutely securely erase the data, you need to do at least several passes, each writing random data on the drive. There is a specialized software avaiable for this, however You can just use this command several times:
dd if=/dev/urandom of=/dev/device
on Linux. Just boot up an Ubuntu LiveCD. Replace "/dev/device" with the disk you want to erase (eg. /dev/sda or /dev/sdb).
Of course make sure first if you are cleaning the right disk - any data will be irreversibly lost: You have been warned